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Table of Contents
with 30.6% for fiscal 2011.
Avnet's effective tax rate on income before income taxes was 23.2% in fiscal 2011 as compared with 29.9% in fiscal 2010. The fiscal 2011
effective tax rate was impacted by a net tax benefit of $32.9 million primarily related to the EMEA legal entity release of a tax reserve, as
previously mentioned, and, to a lesser extent, net favorable tax audit settlements, partially offset by changes to existing tax positions. The fiscal
2010 effective tax rate was impacted primarily by changes to estimates for existing tax positions and net favorable tax audit settlements, offset
by a reserve established against certain deferred tax assets.
Avnet's effective tax rate is primarily a function of the tax rates in the numerous jurisdictions in which it does business applied to the mix
of pre-
tax book income. The effective tax rate may vary year over year as a result of changes in tax requirements in these jurisdictions,
management's evaluation of its ability to generate sufficient taxable income to offset net operating loss carry-
forwards and the establishment of
reserves for unfavorable outcomes of tax positions taken on certain matters that are common to multinational enterprises and the actual outcome
of those matters.
The Company is in the final stages of two audits by the U.S. Internal Revenue Service, one of which relates to the Company and one relates
to the pre-
acquisition period of an acquired entity. As a result, it is reasonably possible that within the next twelve months, the Company may
record a tax benefit of $30.0 million to $35.0 million, which would favorably impact the effective tax rate in the period in which the matter is
effectively settled. This estimated benefit is comprised primarily of the recognition of additional net operating losses as well as the release of
related reserves, partially offset by unfavorable audit adjustments.
Net Income
As a result of the factors described in the preceding sections of this MD&A, the Company’
s net income in fiscal 2012 was $567.0 million,
or $3.79 per share on a diluted basis, as compared with net income of $669.1 million, or $4.34 per share on a diluted basis, in fiscal 2011 and
$410.4 million, or $2.68 per share on a diluted basis, in fiscal 2010. Fiscal 2012, 2011 and 2010 results were impacted by certain items as
presented in the following tables:
26
Year Ended June 30, 2012
Operating
Income (Loss)
Pre-tax
Income (Loss)
Net
Income (Loss)
Diluted
EPS
(Thousands, except per share data)
Restructuring, integration and other charges
$
(73,585
)
$
(73,585
)
$
(52,963
)
$
(0.35
)
Gain on bargain purchase and other —
2,918
3,463
0.02
Net tax benefit —
—
8,616
0.06
Total
$
(73,585
)
$
(70,667
)
$
(40,884
)
$
(0.27
)
Year Ended July 2, 2011
Operating
Income (Loss)
Pre-tax
Income (Loss)
Net
Income (Loss)
Diluted
EPS
(Thousands, except per share data)
Restructuring, integration and other charges
$
(77,176
)
$
(77,176
)
$
(56,169
)
$
(0.36
)
Gain on bargain purchase and other —
22,715
25,720
0.17
Release of tax valuation allowance, net of tax reserves
adjustments —
—
32,901
0.21
Total
$
(77,176
)
$
(54,461
)
$
2,452
$
0.02